A comprehensive estate plan should accomplish far more than just deciding who will receive your estate property after your death. Because of the unique nature of estate planning, the additional goals you include in your plan will depend on your needs and concerns. Asset protection, however, is a popular component included in many estate plans. A better understanding of what is meant by “asset protection” may help you decide whether or not it should be included in your estate plan.
If you have worked hard, saved frugally, and invested wisely over the course of your lifetime you undoubtedly want to protect the assets you have amassed as a result. Whether you realize it or not, your assets could be at risk in a number of ways, including:
- Creditors – creditors of yours as well as of beneficiaries can attach assets to an unpaid debt.
- Spendthrift beneficiaries – a “spendthrift” beneficiary can quickly deplete assets that are gifted outright to the beneficiary.
- Divorce – you may have considered the impact of your own divorce on your assets but have you considered what the divorce of a beneficiary can do to gifted assets?
- Bankruptcy – likewise, a beneficiary’s bankruptcy can mean a loss of gifted assets if the asset is not protected from bankruptcy proceedings.
- Medicaid eligibility – statistically speaking you stand about a 50 percent chance of needing to qualify for Medicaid during your “golden years” to cover the high cost of long-term care. To qualify you may first be required to “spend down” your own assets, resulting in the loss of your life savings in a matter of months.
Proper estate planning can dramatically reduce, if not completely prevent, the loss of estate assets. A well drafted trust agreement, for example, can protect assets from creditors, beneficiaries, divorce, and bankruptcy. Likewise, the incorporation of Medicaid planning techniques into your estate plan early on will ensure Medicaid eligibility without the loss of valuable assets should the need arise during your retirement years.
At Morey and Associate CPAs, we help our clients protect their life long accomplishments. If you’d like to discuss your situation, simply call 949-759-5626 or 949-485-2011 and ask for Jerry.
Morey and Associates has convenient locations in Newport Beach and San Clemente CA. As part of our practice, we work with successful entrepreneurs, small business owners and high net worth individuals.